Correlation Between Panda Financial and Great Sun

Can any of the company-specific risk be diversified away by investing in both Panda Financial and Great Sun at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Panda Financial and Great Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Panda Financial Holding and Great Sun Foods Co, you can compare the effects of market volatilities on Panda Financial and Great Sun and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Panda Financial with a short position of Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panda Financial and Great Sun.

Diversification Opportunities for Panda Financial and Great Sun

0.67

Correlation Coefficient

Panda Financial  Great Sun

Poor diversification

The 3 months correlation between Panda and Great is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and Panda Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Panda Financial Holding are associated (or correlated) with Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Panda Financial i.e., Panda Financial and Great Sun go up and down completely randomly.

Pair Corralation between Panda Financial and Great Sun

Assuming the 90 days trading horizon Panda Financial Holding is expected to generate 1.21 times more return on investment than Great Sun. However, Panda Financial is 1.21 times more volatile than Great Sun Foods Co. It trades about -0.13 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about -0.24 per unit of risk. If you would invest  1,540  in Panda Financial Holding on October 2, 2024 and sell it today you would lose (178.00) from holding Panda Financial Holding or give up 11.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Panda Financial Holding  vs.  Great Sun Foods Co

Panda Financial Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Financial Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Great Sun Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great Sun may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Panda Financial and Great Sun

The main advantage of trading using opposite Panda Financial and Great Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Financial position performs unexpectedly, Great Sun can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Great Sun will offset losses from the drop in Great Sun's long position.

The idea behind Panda Financial Holding and Great Sun Foods Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.